Too Many Cards? Some People Shouldn’t Apply for the Chase Sapphire Preferred

Although it’s great news that Chase increased it’s signup bonus for the Sapphire Preferred credit card yesterday, some people are understandably hesitant about applying if they’ve had recent activity on their credit report. It’s not uncommon for those who read this blog to apply for several cards at once and sometimes dozens in a given year. For example, Larry emailed me last night:

If I was rejected for the Sapphire Preferred only a couple of months ago because I “had too many credit cards,” (according to the re-consideration line), do you think it is worth applying again?

I told Larry that I recommend he wait if there weren’t any other recent changes in his credit history. Any hard inquiry typically lowers your score by 5-10 points for about 2-3 months, and it stays on your record for two years even after it no longer affects the score. For most people, a temporary decrease is negligible if you have a good score — 750 minus 10 is still a healthy 740 — and well worth getting the signup bonus. However, no one wants to apply and risk a hit if they think there’s a good chance of getting rejected.

Chase in particular has made it more difficult to get approved for some of their credit cards recently. Aggregate reports suggest that Chase is denying new applications from people who have already received five new cards in the last two years. Given the average person might apply for one new card in this time period, it’s not a lot to worry about. It is an issue for people who “churn” and trying to apply for many cards in one year.

There is not much you can do to avoid this problem because the past approvals are already on your credit history. However, the rule is not as hard and fast as you might think. You may still be able to make a successful application given the following considerations:

If your applications in the past two years are distributed over several credit bureaus, it’s possible that any one report will not show more than five. See if you can determine this number for each bureau (TransUnion, Experian, and Equifax) and check out the Credit Pulls Database to see which report Chase pulls in your state.

If you applied so recently that the new applications aren’t even on your credit report yet, then that could also work. In other words, a better interpretation of the rule may be “new applications between five days and two years ago.” Applications in the last week or more than two years probably won’t matter.

The “five card” rule is not hard and fast. If you fall under the five card rule when you exclude business cards and those on which you’re only an authorized user (not the primary accountholder), then it’s possible there will be an exception.

One consolation: The strict rules on applying for new cards seem only to affect those that earn Ultimate Rewards points. If you’re applying for a new card that earns airline miles or hotel points with one of Chase’s partners, those opportunities appear to remain viable even with a recent history of new applications.

Assuming you are approved, what about the signup bonus? Again, for the average person there is nothing to worry about, but if you have had the Sapphire Preferred card before, then you must wait at least two years in order to get it a second time. This means two years since you received the last bonus, not since you applied for the card (there may have been a couple months’ delay). You also cannot be a current Sapphire Preferred cardholder, but you could be an authorized user on another person’s card.

Those are both good arguments. It’s still possible that there will be different information on each record. The three bureaus keep similar but not identical information.

Diamond Vargas

I was recently denied for a United Business Explorer card (later approved via secure message reconsideration). When speaking with an agent during the initial denial, she quoted the total number of cards I had opened in the last two years — the number was accurate independent of which credit bureau had been pulled during the application. I assume they’re using the same methodology for Ultimate Rewards cards, so I don’t think the bureau pulls have any bearing on the 5/24 rule.

I’m trying to figure whether it’s worth it to try recon. I like the secure message concept. How did you go about reaching them through secure message, and what points did you use to convince the rep?

Diamond Vargas

I just selected Business Credit Cards / Other or something similar in the topic drop down menus if the regular secure message center. Then I referenced that i am a longtime customer with multiple accounts, my credit score, that I like the card benefits that match up with my business spending patterns, and that it would be a good compliment to my other business cards. Also asked to have the inquiry “escalated”.

Surprised that my husband was denied a SWA business due to too many cards but was approved same day for SWA personal. FWIT business card was applied for first. Is it even worth making a reconsideration call? Has anyone managed to overturn a Chase NO due to too many cards? FICO is good – 800 +/-

Applications for business cards are scrutinized much more carefully. If your husband has a legitimate business and can support his need for new credit with details like monthly expenses, annual profitability, etc, then a reconsideration call could help.

Christian

I applied for a UA personal card late last month. No word for over 2 weeks, then got a call. The rep asked why I had 10 new accounts and 10 inquiries in the last year. Credit score is 750+, so I said that there were new cards that I liked. All seemed well until, at the very end the rep suddenly put me on hold after saying that I’d be eligible for a $9500 credit line. The rep then said that they’d let me know. Near as I can guess, a supervisor overrode the rep. I just got a letter yesterday, saying I was declined for too much new credit and too many inquiries. I expected this for UR cards, but this is new for cobranded cards, as far as I know.

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